Abstract
The Modern Portfolio (MP) Theory developed by Markowitz discuss the problem of distribution of asset capitals. Although many studies have discussed the relationship of asset allocation vs its related risk and return in the World stock markets, however less attention has been paid on the Chinese stock market and its dealing with the European Union. This article attempts to investigate Risk and Return and optimization of returns for the Shanghai Stock Exchange, which is considered as the backbone of Chinese Stock Market. A dynamic portfolio based on high value stocks of different industries which are trading in European Union have been prepared to apply the test. Subsequently their return, co variance, standard deviations have been calculated. The Risk-utility relations have been focused by gathering empirical stock-price data, and resultantly descriptive portfolio has been optimized using the empirical data. The dynamic portfolio delivering superior outperformance relative to the passive and buy-and-hold stable stock portfolios for the Chinese companies trading in the European Markets.
Keyword(s)
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